News

Notes from Apple’s Q3 2012 Conference Call

During Apple’s third quarter 2012 financial results conference call, Apple CEO Tim Cook and CFO Peter Oppenheimer made a number of comments related to Apple’s iPhone, iPad, and iPod businesses.

Peter Oppenheimer, Apple’s CFO, opened the conference call by calling attention to the company’s record June quarter, which he said was fueled primarily by strong iPhone and iPad sales.

He said that iPod sales, though down year-over-year, were ahead of internal projections, and as with the past few quarters, the iPod touch accounted for over half of iPod sales. U.S. share of the MP3 player market remained at over 70 percent. He added that iPhone is now available from over 250 carriers in over 100 countries, and said that the company estimates that the number of Fortune 500 iPhones has doubled over the last year.

Regarding iPad, Oppenheimer said the company was “thrilled” with sales. The company saw very strong year-over-year growth globally, and the iPad is now available in 97 countries. Just under one million iPads were sold into the education market during the quarter, and Oppenheimer said sales of iPad 2 in K-12 market were particularly strong. Notably, the iTunes U app has been downloaded over 14 million times, and over 700 new courses have been added.

Overall, over 410 million iOS devices have now been sold. The App Store now offers 650,000 apps, 225,000 of which are tailored to the iPad. Apple has now issued over $5.5 billion in payments to developers, and now boasts 150 million iCloud users.

During the Q&A session, both executives made several comments of interest.

Oppenheimer said that weekly iPhone sales continue to be impacted by rumors and speculation related to new products, a subject that would come up later, when Tim Cook replied to a pointed question about iPhone transitions. Cook said that he’s happy that people want the next thing, and added that he’s not going to put any energy into trying to get people to stop speculating about what the company may be doing next.

Discussing iPhone pricing in emerging markets, Cook said that the company has been very focused on China, seeing it as an enormous opportunity. He said that he firmly believed that people in emerging markets want great products, so Apple is going to stick to its “knitting,” and continue to make the best products it can.

Cook also discussed the iPad pricing umbrella, competing tablets, and the decision to offer the iPad 2 for $399 alongside the third-generation iPad. He said that iPad 2 did very well during the quarter. In terms of competition, he said Apple has seen tons of tablets come onto the market this year, and doesn’t think any of them have gained serious traction. He said the company is going to keep innovating in the space, and feels really confident about its momentum. Later, when discussing the iPad 2’s price point, he said that the company believed it would help drive elasticity, and it certainly helped in the K-12 market. He added that it’s been a big help to Apple, and he’s glad the company did it.

Discussing the Apple TV, Cook said that Apple sold 1.3 million in the third quarter, up over 170 percent year-over-year, bringing sales for the year to over 4 million. He said that’s still at a level that Apple would call a hobby, but it continue to invest in it, and there are a lot of people at Apple who are believers in Apple TV.

Finally, when asked if Passbook be a stepping stone to a digital wallet, he said that it’s a key feature, and that employees of Apple all found themselves receiving all these tickets and passes. He said it does a great job of pulling all those together in one place. He again called it an important feature, but said that he wouldn’t want to speculate on where it might lead.